ANKARA, June 26 (Reuters) - Turkey faces a growing danger
Syrian economic and social disruption could spill onto its soil,
with some fearing an influx of refugees could draw its troops
into border operations uncomfortably close to Syrian forces.

President Bashar al-Assad's crackdown on opposition has
pushed once-warm ties with Syria close to breaking point.
Assad's increasingly bloody repression of protests has driven
12,000 Syrian refugees to move north and take shelter in camps
in Turkey, while Syrian troops move up to seal the area.

Ankara has sharpened its rhetoric against Damascus --
publicly nudging Assad to pass reforms and calling his crackdown
"savagery" -- but analysts say Turkey is still holding out hope
for a change of heart in Assad.

Turkish Foreign Minister Ahmet Davutoglu said on Friday a
speech by Assad contained "positive elements in it as signals of
reform", but said it was important that action followed.

"The Turks seem to be quite worried about a lack of
alternatives to a stable regime other than a cruel tyrannical
succession," said a Western diplomat with knowledge of the
Turkish perspective.

"Their last best hope -- although they are not naive -- is
that somehow Assad, out of desperation to save his own skin,
will undertake meaningful reforms."

Syria, an ally of Iran, sits at the heart of numerous
conflicts in the Middle East. An unstable Syria would have
repercussions for Turkey, which also borders Iran and Iraq.

"The fear of the unknown is a major factor," said Gareth
Jenkins, an Istanbul-based security analyst.

"AK is very conservative. It prefers to deal with the devil
it knows and Assad is the devil it knows," Jenkins said,
referring to Prime Minister Tayyip Erdogan's ruling AK Party,
which has improved ties with Syria and other Muslim countries.

But Turkey could decide to ditch Assad should Syria descend
into a civil war between religious and ethnic groupings.

Though non-Arab, Turkey's demographics have similarities
with Syria's. Both have a Sunni majority with Kurdish and
Alawite minorities, although Assad's ruling family are Alawites.

"The strategic, political dimension says that the stability
of Syria is vital for the fragile stability of the Middle East,"
Murat Yetkin, editor of the Hurriyet daily, wrote recently.

"But that doesn't mean that the current regime will be
supported at any cost, because the Baath rule cannot produce
stability anymore, as it insists on the current policies."

BUFFER ZONE

With refugees pouring across the border, media have reported
that Turkish political and military leaders are considering
setting up a buffer zone inside Syria in case the number of
refugees increases sharply.

Officials say they are not aware of such plans.

Turkey's 2nd Army Commander visited the Guvecci border post
this week to take stock of Syrian troop deployments near the
border and to see the situation of the refugees for himself.

Turkey was caught off guard when 500,000 people flooded
across the border from Iraq during the 1991 Gulf War, many of
them staying for some time after the war. The years that
followed saw small contingents of Turkish troops policing what
was an effective 'buffer zone' in the north of Iraq.

Having almost gone to war in the late 1990s because of
Turkish Kurdish militants using Syria as a sanctuary, Damascus
would not welcome the prospect of Turkish boots on Syrian soil.

Ankara still faces an insurrection by Kurdish militants
seeking their own state in the south-east. Turkey is eager to
see borders with Syria, Iran and Iraq that, while open to
commerce, are well sealed against rebel infiltration.

Jenkins said creating a buffer zone in Syria would carry
risks given concerns of Turkish "neo-Ottoman" foreign ambitions
in some Arab countries, but said Ankara might be forced to it in
the case of a mass influx of refugees.

"If we start seeing a spillover that upsets the internal
demographic dynamics of Turkey a buffer zone would be possible.
The Kurds are the elephant in the room here," he said.

SHIFT

While Turkey has failed to use its economic leverage to
force a change in Damascus -- Turkey is Syria's largest trading
partner -- it is manoeuvring to adapt to any fallout.

A few months ago, Turkey and Syria were holding joint
cabinet meetings and military exercises and abolished visa
requirements. Earlier this month, Turkey hosted a conference of
Syrian opposition figures in the city of Antalya, and members of
the outlawed Syrian Muslim Brotherhood operate out of Turkey.

Meanwhile, there have also been early signs of a thaw in
frosty relations between Turkey and Israel, Syria's enemy.

"The policy of warming up to Syria has collapsed, but rather
than Turkey reaching a point in which its patience with Assad
will snap we will see Turkey finding new margins of manoeuvre to
whatever situation emerges," said Semih Idiz, a foreign policy
expert for Milliyet daily.

The Syrian crisis has also pushed Ankara and Washington into
closer cooperation after falling out of step over Iran.

Erdogan, who once vacationed together with Assad, and U.S.
President Barack Obama have discussed Syria twice by phone
recently and share a need for Damascus to implement reforms.

Assad's repression has triggered a gradual escalation of
U.S. and European Union economic sanctions against Syrian
leaders, but Turks don't agree on sanctions.

"Turks hate sanctions. Turks suffered greatly under
generations of sanctions in Saddam's Iraq and now with Iran. The
last thing Turkey wants is a third country on its eastern border
under international sanctions," the Western diplomat said.

"They likely would not hesitate to point out to Assad the
examples of Saddam and Iran, if he persists in oppressing his
own people and defying world opinion." (Editing by Ralph
Boulton)
(Created by Ralph Boulton)